Reliance Nippon Life Asset Management Ltd IPO Message Board (Page 60)

Reliance AMC IPO by StallionAsset.com


Stallion Assets View – We Strongly believe that Markets are underestimating the financialization of savings as a theme, the total Profit pool of top 5 Asset management companies (57% Market Share) in India is just 1800 Crores in FY2017. The Profit Pool is so small that one midsized popular hedge fund Pershing Square made more Profit than the Entire Indian Asset Management Industry, We at Stallion Asset have absolutely no doubt that the Profit Pool will grow multi fold in next 5-10 years and there will be massive wealth Created in this space.
These are the 7 Main Factors you need to know about Reliance Nippon Life Asset Management Company.

Factor #1 – Opportunity Size – The Below Land & Gold) Grew 1% CAGR,whereas Financial Assets at 14%CAGR.

The Savings in Mutual Fund as a percentage of overall Savings in India was at 3% in FY2016, this is Exactly the same place where it was in USA in 1980, this moved to 18-19% by 1998 in USA. Since there is consensus that Gold and Real Estate wont move a lot for next 4-5 years, a similar move is expected in India. If this happens in India, it can be the trillion dollar Opportunity in Asset Management Companies.

In 1979 the total AUM with Mutual Funds in America was just 94 Billion $, in the next 20 years by the end of 1999 the Asset under management grew to 6,846 Billion$, i.e. it grew at 24% CAGR. In the Year 1980, only 4.6% USA Citizens owned mutual fund, which is the similar Rate of that in India today, whereas in the next 20 years in USA this number shot up to 48.6%. This was also the Period where Legends like Peter Lynch, Paul Tudor Jones, George Sorus, Warren Buffet were created, we expect a repeat of the same in the Indian Market.

Factor #2 -Understanding the Mutual Fund Business – The Top 5 AMC’s in India have 57% Market shares and top 10 Mutual Funds have 80% Market Share, the competition is fierce among the Top 5 with broadly the same market Share.
Mutual Fund AUM is the worse metric to look at and judge a company because there is huge variation in fees structure across products.. In FY2017, The Fees Reliance AMC got for Equity Funds was 1.35% of AUM, in debt 0.48% of AUM, but just 0.09% in Liquid Fund and 0.95% in Gold. The obvious thing is that more the Equity Portion in the AUM, Higher the fees they Make. HDFC has the highest Revenue as % of AUM at 0.68% as 44.7% of its AUM is Equity Mutual Funds whereas SBI has the lowest Revenue as % of AUM at 0.47% as it has only 31% in Equity Mutual Funds. Reliance AMC has lower AUM in Equity compared to SBI MF at only 28% of its total AUM but still has a good Revenue % of AUM at 0.62% as its fees are higher compared to peers.

Factor #3- Growth – The AUM of Mutual funds has grown from 8.96 Lakh Crores in FY2014 to 18.58 Lakh Crore in FY2017, a growth of 27%, but the Interesting thing is that the high margin Equity AUM has grown from 1.98 Lakh Crore in FY2014 to 6.09 Lakh Crores in FY2017, showing a mindblowing CAGR growth of 45% in last 3 years. As Retail Investors invest in Equity Again since FY2014, Birla Sunlife AMC grew its Equity portfolio the fastest at 63%, whereas Reliance AMC underperformed the market with lowest growth of 34%. It is important to note that within the Top 5 AMC’s of India ICICI AMC has gained the highest share in the recent run and its Equity AUM Grew at 60%. HDFC on the other hand underperformed as well with last 3 year CAGR of only 34% and might lose its position of the largest Equity AMC Company to ICICI AMC in FY2018.

Factor #4- Persistency Ratio – You might be thinking why are we using Persistency ratio in a AMC Company which is commonly used in Insurance companies right? You will be Surprised to know that In FY2017, 43% of Equity Mutual Fund Investors booked out of their fund within a year, 62% Investors sold out within 2 Years. We at Stallion Asset believe that the overall long term trend of the Industry is positive, but there will be huge cyclical Upturns and Downturns in between. Low Yield of other asset classes like Real Estate, Gold and Fixed Deposit will keep getting new Investors in Equity Market, but as soon as Inflation rises above 7% in India, there will be a shift of Asset class preference.

Factor #5- Return on Equity – When i read the Prospectus of Reliance AMC for the First time, i was hurt to see that this AMC’s is generating just so much less ROE in a Super upcycle. Asset Management is a business which needs very less capital and should have very High ROE. In FY 2017 Reliance AMC had a Return of Equity of just 21%, whereas ICICI AMC Was the Leader in the Pack with 65% ROE. ICICI AMC was the one to grow its Equity AUM the fastest at 60% CAGR in last 3 years, whereas Reliance AMC was the slowest Equity AUM Gainer with 33% CAGR hence the return ratio’s are poor. The Largest Equity AUM was with HDFC AMC and it had an ROE of 39% in FY2017.

Factor #6-Valuation –Reliance AMC IPO is coming at a Market Cap of 15,400 Crore or a PE Multiple of 38 or 7.3% of FY2017 AUM. Nippon Life had last Increased stake in Reliance AMC in 2015 at a valuation of 8,500 Crores or 5.66% of AUM. In Last 5 years, there has been a lot of consolidation in the Mutual fund space and most foreign players have exited to Indian players getting Valued at 1.5-6% as a % of AUM . We at Stallion Asset have absolutely no Doubt that the Profit Pool in AMC’s will grow 5-10x in next 10 years as financialization of savings theme gains momentum.


Conclusion – The bet here is on the Opportunity size though Reliance Asset management has probably the worse matrix in the top 5 asset management companies. The IPO is a Bull Market IPO and definitely not cheap but there is huge longevity of Growth in AMC companies. We believe Reliance AMC since its the First AMC to be listed will get scarcity premium but as and when more AMC’s get listed the scarcity premium will vanish. Reliance AMC is what it is today due to 2 main Inspirational gentlemen 1) Mr Sunil Singhania 2) Madhu Kela, though both have left the company in last 6 months. We believe ICICI is the best managed AMC whereas Reliance and Birla AMC is the Bottom Pyramid within the top 5. There is no Doubt the business of AMC is great and Huge Operating leverage in it, the wind is blowing in favor of Asset Management companies and Reliance AMC will ride the wave in this bull Market.

We Recommend a Subscribe on it.

Which is best IPO Reliance or Mahindra

At Rs 252, the PE ratio works out to 37 of FY17 earnings. There is no other listed AMC to do a peer to peer analysis. It is a very tricky situation as ADAG stocks usually command a discounted valuation but the company looks ripe for a 15% to 18% p.a. and higher CAGR over the next 4-5 years.

When the stock markets underperform, the AUM, Revenue and Profit growth slows down and thus this becomes a high beta stock. We believe that the market will offer opportunities to buy Reliance Nippon at a lower price than the issue price over the next few months.

To conclude, we suggest an AVOID for the IPO. We believe that the market will give opportunities to buy the stock at lower valuations and that the current price offers NO MARGIN OF SAFETY. The target is to buy good businesses at cheap to fair valuations. Reliance Nippon Life Asset Management is at premium valuations coming out with an IPO in a heated up market.

I am very much confidant . Soon it will be available at 200 / 225 after listing regardless any formula. In ADAG stocks p/e , p/b,peg , no formula works.Only laggard factor works.

This IPO is good. But since the registrar is KARVY, I don''t have any hope.

GMP last heard:

Reliance Nippon
68.50 - 69.50

Madam,
Reliance Nippon me one lakh ki Application kar ne pe share lagan ke chance khada hota he

Kyu bina wajah time pass ke bhi msg krte he log pata nahi chalta to msg sirf padho plz

This might be record ! According to merchant banking sources, Reliance Nippon Life Asset Management Company (RNAM) has received great response from investors for its initial share sale during the recent roadshows.

The company is expected to see demand worth more than Rs 15,000 crore for the shares on offer for anchor investors, they added.

The portion allocated for anchor investors is worth Rs 462 crore. The anchor book subscription will be open on October 24.

Further, more than 50 global anchor investors have already applied for anchor allocation portion from the US, Japan, Singapore and India. These include sovereign wealth funds, mutual fund houses and private insurance companies.

Abu Dhabi Investment Authority, Morgan Stanley, Fidelity International, DE Shaw, Morgan Stanley, HDFC Mutual Fund (MF) SBI MF, DSP BlackRock MF, UTI MF, ICICI Prudential Life Insurance Company and Bajaj Allianz are among the anchor investors that approached RNAM''s for anchor portion.

Big hit ????????

Thank you gamble sir

-23 -24 gic
69-70 nippon
112-114 MLL

https://economictimes.indiatimes.com/markets/stocks/news/reliance-mutual-fund-ipo-draws-big-demand-from-anchor-investors/articleshow/61184130.cms

Hi Gamble ji ,
Plz suggest me script which i can buy from the Secondary market.
thnx

Many given including some ADAG stock also, check past msgs.

Thnx gamble sir

prem Rel nippon 68 70

vry gd ipo apply wid full force..will list 150 prm surely...

They are running a paid social media campaign using fake/paid accounts to trend the IPO. This is really a desperate move.

GMP last heard:

Reliance Nippon
68.50 - 69.50

Thanks Eagleye Mam.

mam should i apply besides this company credibility ? please guide thanks in advance

http://kosmic.karvy.com/eipo/Downloads/FrequentlyAskedQuestions.pdf

Those who are interested to know please read FAQ by Karvy

Seem too costly. So it is risky for applying this ipo. Those who want to take risk then can take risk.

Down Premium nippon MLL
66~68
123~125

GIC premium last heard

-21/-20

The savings in Mutual Fund in India was at 3% in FY2016, this is exactly the same place where it was in USA in 1980, this moved to 18-19% by 1998. Since there is consensus that Gold and Real Estate won’t move a lot for next 4-5 years, a similar move is expected in India. If this happens in India, it can be the Trillion-Dollar opportunity in Asset Management Companies. In 1979 the asset base with Mutual Funds was just $94Billion, in the next 20 years but the end of 1999 the Asset under management was $6846Billion, i.e. it grew at 24%. In the Year 1980, only 4.6% USA Citizens owned mutual similar rate of that in India today, whereas in the next 20 years i.e. by 2000 this number shot up to 48.6%. This was also the Period where legends like Peter Lynch, Paul Tudor Jones, George Soros, Warren Buffet were created, expect a repeat of the same in the Indian Market.

First AMC issue opens Tomorrow

Not Tomorrow , on Wed. 25th
Tomorrow there is listing of energy exchange , first time in Indian Market.

I must say India and USA are not comparable ! All inflow to AMC''s based on current Bull Run ! this is based on hope that MODI is doing "something" .... (I changed the "Well" to "Something") .. A small correction is enough to determine peoples patience and courage ! with a 1000 points negative to nifty for a week period will make 15-20% SIP''s redeemed ! rest will be a blood bath for retailers ! but for USA, There is a minimum guarantee about the system, Government, educated rules etc. etc.... ( USA Means > really beyond our end of thinking capacity )

To all - Suno Sab ki Karo mann ki ...But remember Money is very precious and you cant get it from slums !

*SOURCES SAY*
: RNAM receives demand of over Rs 15,000 cr; Anchor Book oversubscribed by over 30 times

GMP last heard:

Reliance Nippon
68.50 - 69.50

RELIANCE NIPPON NO BUYER IN THIS GMP

We hv full confidence what ever u wrote????

No need the word "heard"

Sticking to its schedule, Reliance Capital is on track to list its asset management arm – Reliance Nippon Life Asset Management (RNLAM). The issue, which would open on October 25, has many positives such as a diversified asset base with strong investment track record. These attributes have helped RNLAM grow its business profitably. Equally important is its positioning as number three player (11.4 per cent market share, as per ICRA) among asset management companies (AMCs), which is aided by an exhaustive distribution network. While these pluses augur well, the initial public offering (IPO) priced at 36x FY17 earnings on pre-issue basis and 38x on post-issue basis seem to leave little on the table for those interested in immediate listing gains. The offer may, hence, be best suited for long-only investors.
Business
RNLAM’s operations can be segmented as mutual funds, managed accounts and offshore funds and advisory mandates. The mutual funds business, which accounts for about 58 per cent of the RNLAM’s assets under management (AUMs), handles debt and equity products including exchange-traded funds (ETFs). Debt funds, including liquid products, account for about 65 per cent of total mutual fund AUMs as on June 30, 2017. The proportion is higher than those of HDFC AMC and ICICI Prudential AMC (55 - 60 per cent), which is also a reason for RNLAM’s better profitability as managing debt funds involves relatively lower expenses vis-a-vis equity.
As for the managed assets business (41 per cent of AUMs), managing funds of the Employees’ Provident Fund Organisation (EPFO) accounts for over 80 per cent of this portfolio. RNLAM also offers portfolio management services or PMS to individuals (mainly high net worth) and manages alternative investment funds (AIF), though their contribution to AUMs and revenues is quite meagre for now.
RNLAM also handles offshore funds across Asia, Middle East, Europe and US and provides advisory services to its clients.
Financials
The strength of RNLAM lies in its ability to grow its AUMs in a profitable manner. Its total AUMs have grown from Rs 1,60,045 crore in FY13 to Rs 3,50,755 crore in FY17 – a compounded annual growth rate (CAGR) of 22 per cent. The mutual funds business has clocked 25.7 per cent CAGR during this period, while managed accounts business has witnessed 19.1 per cent growth. On the back of strong AUM growth, its revenue, operating profit and net profit too have expanded at a CAGR of 21 per cent, 28 per cent and 15 per cent, respectively over FY13 – FY17.
Issue details
The issue proceeds, estimated between Rs 1,512 crore and Rs 1,542 crore, is to be deployed towards RNLAM’s business development plans, which include setting up a new AIF, marketing spends and setting up new branches. Interestingly, Rs 165 crore is set aside for inorganic growth, which analysts believe is essential to move at least 50 basis points higher in the league table.
Valuations
At the upper end of the price band, the IPO is valued at 36x FY17 earnings (pre-issue). Due to lack of immediate compares, if these valuations are compared with that of non-banking finance companies (NBFCs) which trade at 30 – 40x FY17 earnings, the issue appears reasonable. However, considering RNLAM’s higher exposure to debt MFs (which traditionally command lower valuations – five per cent of AUMs) and its business model which is relatively risk-free as against NBFCs who take balance sheet risk, RNLAM’s valuations seem to be on the higher side.
Risks
Unlike ICICI Prudential or HDFC AMC, RNLAM’s model relies on third parties and intermediaries for its distribution network, which currently works on long-term agreements. Any change in this structure could impact RNLAM’s network. Much of the retail investor inflows lately have been channelized through systematic investment plans (SIPs). This insulates them partly from the redemption pressures and the AMC industry too hasn’t seen the kind of redemption pressure witnessed during the Lehman crisis. However, a bad spell in equities could impact the AUMs and balance sheets of AMCs, if the industry is exposed to similar pressures. And, this could reflect on their profitability and valuations.

Bharti airtel share is almost all time high while Rcom share at all time low see the diffrence ADAG group is not trustable